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CIRCULAR No

CIRCULAR No.96/1997/TT-BTC OF DECEMBER 31, 1997 GUIDING THE REGIME OF COLLECTION AND REMITTANCE OF MINERAL ACTIVITY PERMIT FEES

Pursuant to Articles 28 and 29 of Decree No.68-CP of November 1st, 1996 of the Government detailing the implementation of the Minerals Law;

Pursuant to Decision No.276/CT of July 28, 1992 of the Chairman of the Council of Ministers (now the Prime Minister) on the uniform management of charges and fees;

The Ministry of Finance provides the following guidance on the collection and remittance of mineral activity permit fees:

I. FEE PAYERS AND LEVELS OF FEE

1. Fee payers:

Vietnamese and foreign organizations and individuals allowed to conduct mineral activities as defined in Article 15 of Decree No.68-CP of November 1st, 1996 of the Government that details the implementation of the Minerals Law, shall have to pay the following kinds of fee:

a/ The fee for mineral survey, prospection, exploitation and processing permits (hereafter referred to collectively as mineral activity permits).

b/ The fee for the exclusive mineral prospection permits with effective duration of 12 months or more.

2. Levels of fee

a/ The levels of mineral activity permit fee are provided for as follows:

No. Kinds of permit Unit for calculation For brand-new For the renewed

permits permits (extension,

change, assignment,

inheritance)

I SURVEY

1 Domestic organizations

and individuals 1,000 VND 500 250

2 Foreign organizations

and individuals or joint

ventures with foreign

parties USD 300 150

II PROSPECTION

1 Domestic organizations

and individuals 1,000 VND 2,000 1,000

2 Foreign organizations

and individuals or joint

ventures with foreign

parties USD 1,000 500

III EXPLOITATION

1 Domestic organizations

and individuals 1,000 VND 4,000 2,000

2 Foreign organizations and

individuals or joint ventures

with foreign parties USD 2,000 1,000

3 End-all extraction

- Organizations 1,000 VND 1,000 500

- Individuals 1,000 VND 50 20

IV PROCESSING

1 Domestic organizations

and individuals 1,000 VND 2,000 1,000

2 Foreign organizations and

individuals or joint ventures

with foreign parties USD 1,000 500

For the renewal of a permit under the assignment or inheritance thereof, the assignee or the heir shall have to pay fee.

b/ The levels of fee for the exclusive mineral prospection permits with effective duration of 12 months or more are provided for as follows:

No. Year Domestic organizations Foreign organizations

and individuals and individuals

(VND/km2/year) (USD/km2/year)

1 First year 200,000 20

2 Second year 300,000 30

3 Third year 400,000 40

4 Fourth year onward 500,000 50

The fee amount to be paid for each exclusive prospection permit shall be calculated on the basis of the area and duration of prospection stated in the permit. To make it more simple, the calculation of fees for permits with effective duration of more than one year is determined as follows:

- For permits with effective duration of 12 months, the level of fee set for the first year shall apply.

- For permits with effective duration of more than 12 months but less than 24 months:

+ For the first 12 months, the level of fee set for the first year shall apply;

+ For the remaining months, the level of fee set for the second year shall apply; if the permit's effective duration is under 18 months (the remaining period is 6 months or less), half of the level of fee set for the whole year shall apply; and if the permit's effective duration is more than 18 months (the remaining period is over 6 months), the level of fee set for the whole year shall apply, corresponding the area stated in the permit.

Example: Company A (domestic) is granted a permit for the exclusive right to prospect minerals in an area of 3.5 km2 within 18 months. The amount of fee to be paid by the company shall be determined as follows:

+ The fee amount to be paid in the first year:

200,000 x 3.5 km2 = 700,000 VND

+ The fee amount to be paid in the second year (for the remaining 6 months, half of the level of fee set for the second year shall apply):

300,000 x 3.5 km2

----------------------- = 525,000 VND

2

So, the total fee amount to be paid for the above-said permit by Company A shall be 1,225,000 VND (700,000 + 525,000).

In cases where an exclusive prospection permit has effective duration of less than 12 months, which, after an extension, is valid for full 12 months (the initial time-limit plus the extended duration), the fee shall be paid according to the level prescribed above.

c/ Apart from the above-said levels of fee, the mineral activity permit-granting agency shall not be allowed to collect any other charges or fees from organizations and individuals that apply for mineral activity permits.

d/ The mineral activity permit fees shall be collected in Vietnam dong. For the fee amounts prescribed in US dollar (USD), they must be converted into Vietnam dong, based on the actual exchange rate on the inter-bank foreign exchange market announced by the State Bank of Vietnam at the time of fee collection. If the fee payers wish to pay fees in foreign currency, the fees shall be paid in US dollar according to the levels already prescribed.

e/ In case of the price fluctuation by 20% or more, the Ministry of Finance shall readjust the levels of fee to make them suited to the actual situation.

II. ORGANIZING THE FEE COLLECTION AND REMITTANCE AND MANAGING THE USE OF FEES

1. Organizing the fee collection:

The State agencies competent to issue different kinds of mineral activity permit as defined in Article 9, Decree No.68-CP of November 1st, 1996 of the Government (hereafter referred to as the fee collecting agencies) shall organize the collection of fees in accordance with the provisions of this Circular. The fee-collecting agency shall have to:

- Register and declare with the tax agency of the locality where its head office is located, the collection and remittance of fees for State management over mineral activities;

- Collect fees in accordance with the provisions of this Circular before issuing mineral activity permits. When collecting fee, the receipts, issued by the Ministry of Finance (the General Department of Taxation) must be given to the fee payers;

- Open accounting books to monitor the collection, remittance and use of collected fees in accordance with the State regulations; make the year-end settlement of accounts on the collection, remittance and use of the collected amount of mineral activity permit fees with the tax agency and the financial agency of the same level within 45 days from the date ending the year.

2. Procedures for the remittance of fees to the State budget and the management of the use of fees:

a/ Remittance of fees to the State budget:

- Periodically, before the fifth day of every month, the fee-collecting agency shall make declaration on the amount of fees collected from the issuance of mineral activity permits in the preceding month and send it to the directly managing tax agency, based on the forms issued by the tax agency.

Within 5 days after receiving the declaration from the fee-collecting agency, the tax agency shall have to examine, calculate the fee amount and send a notice to the fee-collecting agency, requesting the latter to remit 80% of the total fee amount collected in the month to the State budget. The tax notice must state clearly the amount of fee to be remitted, the remittance time-limit, the corresponding chapter, type and clause, item 048, sub-item 01 as prescribed in the State budget's contents.

The fee-collecting agency shall have to fully remit to the State budget the fee amount in time as stated in the tax notice.

b/ The agency directly collecting fees for State management over mineral activities shall be entitled to temporarily deduct 20% of the fee amount collected in the month (including the amount of foreign currency already converted into VND) for regular expenditures on the organization of fee collection. More concretely on the following:

+ The printing (or purchase) of application and declaration forms, related dossiers and books and mineral exploitation permits.

+ The payment of wages, allowances, social insurance and medical insurance for laborers hired to evaluate dossiers and conditions for granting mineral activity permits, and for antithesis specialists (if any).

+ The payment of remuneration for officials and employees in charge of the granting of permits and collection of fees, who have to work extra hours (if any), in accordance with the stipulations of the State.

+ Other regular expenditures directly related to the organization of the collection of mineral activity permit fees.

The payment of remuneration for officials and employees working extra hours must be based on the prescribed extra work sheet and the list of extra hour remuneration recipients, which must be signed by laborers when receiving their remuneration. All expenditures must be attached with reasonable and valid vouchers and receipts as prescribed by the State.

The total amount of temporarily deducted fee (20%) mentioned in this Item must be used by the fee-collecting agency for the right purposes; if after the year-end account settlement, such fee amount has not been used up, the remainder must be remitted to the State budget in accordance with the procedures stipulated in Item a, this point.

III. ORGANIZATION OF IMPLEMENTATION

1. Organizations and individuals being fee payers and the agencies in charge of collecting mineral activity permit fees shall have to collect and remit the fees in accordance with the provisions of this Circular; if committing any violations, they shall be sanctioned in accordance with the Government's stipulations on sanctions against administrative violations in the field of taxation.

2. The tax agencies shall have to inspect and oversee the mineral activity permit issuing agencies in the collection and remittance of fees; management and use of the fee receipts and in the latter's compliance with the regulations on accounting books and vouchers.

3. This Circular takes effect 15 days after its signing. All the earlier provisions on fees for State management over mineral activities which are contrary to this Circular are now annulled.

In the course of implementation, the agencies are requested to promptly report the arising problems to the Ministry of Finance for study and settlement.

For the Minister of Finance

Vice Minister

VU MONG GIAO